How scary is this? One in three HR managers have confessed to Webster Buchanan Research that when they're purchasing software or IT services, one of the main factors they keep in mind is their own job prospects.

The finding comes from a survey of HR managers published by my colleagues at Webster Buchanan Research UK in association with Computers in Personnel. In a series of questions covering everything from their IT purchasing priorities to the kinds of lessons HR could usefully learn from their colleagues in sales and marketing, we asked respondents about the different drivers that underpin their investment in HR software or services.

The most popular drivers were all very business-centric. Improving the quality of HR service to employees and managers was important to 89% of respondents, followed by improving the quality of management information (76%) and reducing HR administration costs (73%). Yet there, a little further down the list, was the question that raised eyebrows when we did a test run of the questionnaire prior to beginning our research. Yes - 33% of respondents agreed that expanding their personal experience and enhancing their CV/resume was an important or very important factor, with a further 44% ranking it as of average importance.

At first sight, this doesn't exactly bode well for the concept of creating shareholder value - you're given a budget to invest in services that benefit your organization, not to give yourself a leg-up on the career ladder. But there are other ways of looking at the finding. You can argue, for example, that it merely reflects how technology has become an integral part of the HR and payroll landscape, and that if you want to get on in a senior role, you have to prove you've got what it takes to buy the right software and services. The flipside of that same argument is that making a crass decision could set your career back big time. You really don't want to be known as the person whose 20-country HR and payroll project ground to a halt because the vendor you selected didn't know how to process payroll in Belgium.

All the same, there's something unsettling about a senior HR or payroll professional opting for a better-known vendor in the final selection phase just because it's likely to open up job opportunities for them in the future. It won't be the most important criteria, and it won't  override more significant business drivers: but consciously or subconsciously, spoken or unspoken, it influences the way some purchasers think.

There's an old saying in the IT industry that no-one ever got fired for buying IBM. Take a broad selection of well-known HR and payroll software vendors and the more pertinent question is: How many people subsequently got hired for buying them?

However well you prepare, things can still go wrong in multi-country payroll - as one of the panelists at our recent European Summit ably demonstrated when he knocked his chair off the stage during our opening conference session.

Fittingly, the panel session was entitled ‘What I wish I'd know when I started out in multi-country payroll' - the effects of gravity presumably being one item near the top of the list - and it featured five highly-experienced practitioners, who between them have run projects across the Americas, AsiaPac, Europe, Middle East and Africa. The discussions reinforced the fact that there are many different ways to manage your international payroll operations, that you won't necessarily get everything right first time round - and that the unexpected will inevitably happen.

These opening exchanges set the scene for the whole two-day conference, which covered many aspects of the multi-country payroll journey, from workshops for those who were just starting out in international payroll to sessions on performance and vendor management. Along with insights from analysts, independent consultants and leading vendors such as ADP, NorthgateArinso, Patersons and Safeguard World International, a central component of the event was the real-life experiences of practitioners.

Several key themes emerged from the two days - key among them the recommendation that every now and then it's worth stepping back and reassessing what you're doing. It was a point made early on by the first panelist, who confessed that one thing he wished he'd known when he started out in multi-country payroll was just how much he didn't actually know. His comment echoed a theme that Webster Buchanan raised during an introductory session on trends and myths in the market. We see instances where companies jump deep into the selection process way too early, shortlisting and even selecting partners before they've established some of their own strategic basics or carried out comprehensive research into what their vendor options really look like. Sometimes, it's worth pausing, asking questions and getting a different perspective on all the options.

Skills shortages were another recurrent theme. As a second panelist pointed out, one of the issues in multi-country payroll is that there aren't too many people who've been through this kind of journey - after all, compared to the mature payroll environments you encounter in countries such as the US and UK, multi-country payroll is still a relatively young discipline. As a result, experienced practitioners are in big demand, and if you're looking to increase your pool of expertise, you may need to get creative. That might mean bringing in colleagues from outside the payroll function who have experience in driving transformational change, for example, or hiring external interim payroll managers.

Above all, what the Summit demonstrated is something we've long argued at Webster Buchanan: sharing experiences, good and bad, is a great way of arming yourself for the battles ahead. It's a philosophy that's underpinned our work in this field for the last six years or so, and is the driving force behind a new initiative that we'll be unveiling next month.

We'll be releasing some of the highlights of the two-day conference in a short report later this month - if you weren't at the event, it will give you a taster for the kinds of sessions we'll be running in our next Summit in San Francisco, California in the fall. If you'd like to be notified when this and other multi-country payroll reports are published, just register on this website for our regular email newsletter.  

NorthgateArinso's takeover of Convergys' HR Management arm may have captured the headlines last month, but for the multi-country payroll sector, its work on a different continent may justify just as close a look.

NorthgateArinso, a multinational provider created from the merger of two large European HR and payroll providers, took over the HRO business of Convergys early in March. The $100m deal gave it a much-needed leg-up in the all-important North American market as well as a PeopleSoft presence to add to its SAP business. Although it had enjoyed some success selling to US multinationals in the past, until now much of the revenue has come from their international businesses - clients tended to stay with their incumbent US providers for domestic deals. The addition of Convergys' 20-strong base of large customers gives NorthgateArinso the domestic oomph it needed.

There are other benefits too - Convergys' HR business has expertise in talent management, for example, an area where NorthgateArinso has been building out its own capability for its SAP-based euHReka offering.

For Convergys, the deal closed a painful and expensive chapter in the HR outsourcing space. Its high-profile problems in this sector centered on global implementation issues - particularly at two large customer accounts, where it was forced to restructure its deals - and much of its recent activity has been focused on cutting back and clearing up. The operational side of the business, though, is said to have run relatively smoothly, and in the run up to the sale agreement it renewed eight of its 20 customer accounts. So NorthgateArinso comes in at a time when the focus is primarily on delivery, not set-up. In that respect, it's free of much of the baggage of the Convergys era - all it has to do now is prove it can execute...

What next?
Going forward, several issues will be keenly watched - beginning with the question of whether it can keep its acquired customers and employees sweet. Given that the deal ends a prolonged period of uncertainty for both of them, the new owner will surely get the benefit of the doubt in the short-term.

From the employee perspective, in fact, a more pertinent question may be how much talent was actually lost before the deal was agreed. Significant numbers of employees went as Convergys shut down its various implementations, and while many left parts of projects that were being shuttered, it's not known how much key attrition there was in other areas such as account management and service delivery. That's something that NorthgateArinso's Americas management team, led since September by industry veteran Trey Campbell, will find out.

In the longer-term, we'll be watching to see whether euHReka, NorthgateArinso's on-demand service offering, makes any headway into the existing Convergys business. Customers aren't going to be shifting platform any time soon, but as former Convergys SAP customers come up for renewal further out, there may be an opportunity to migrate them to NorthgateArinso's SAP-based platform (or perhaps a hybrid version that merges the best of euHReka with their existing investment). That's a big shift in approach - the emphasis with euHReka is on offering standardized, configurable services, supplemented by customization where it's needed, as opposed to the custom-build approach at Convergys.

Meanwhile, back on the other side of the world
For the multi-country payroll sector, meanwhile, a completely different acquisition could prove just as interestin g in the near future. While all US eyes have been on the Convergys deal, the big news in AsiaPac was NorthgateArinso's acquisition of one of the leading Australian HR and payroll providers, Neller, the previous month. Combining Neller's presence in Australia and New Zealand with its existing AsiaPac operations gives NorthgateArinso another big leg-up in a part of the world that's attracting growing interest for multi-country HR and payroll services from Western companies.

It also completes another piece of the strategic jigsaw for NorthgateArinso. With SAP-based euHReka targeted at larger employee populations, it now finds itself with two multi-country payroll offerings that come in at a lower price-point for multinationals' tier two countries - Neller and ResourceLink Aurora, a product originally developed out of the UK.

In essence the Neller deal takes NorthgateArinso one step closer to a multi-tier offering for a range of employee population sizes. Some components are missing in gluing this strategy together - but Webster Buchanan Research expects further developments in the coming months. More will be revealed in our upcoming research report on The Changing AsiaPac Landscape for Multi-country Payroll. Watch this space!

The UK Conservative Party - expected to form the next British government in an election this spring - has dropped a bombshell for the payroll industry by floating plans to take over a chunk of payroll processing from employers. It's a controversial idea - but could it actually work?

According to a recent article in The Daily Telegraph, the Conservatives plan to build a giant automated bank-based system (yes, you should start getting worried right about now) that would free employers from having to calculate and deduct income tax as they do today. Instead, organizations would pay their employees gross, and tax contributions would be automatically calculated and deducted as the payment hit the employee's bank account. Touted as a way to reduce the administrative burden for employers, the Conservatives argue it could save businesses £5.5bn (US$8.4bn) and increase tax revenues by £1bn.

Not surprisingly, the move has triggered howls of protest from the payroll profession, with practitioners pointing to a range of potential problems. But could this kind of system actually work, either in the UK or anywhere else?

In principle, the idea has something going for it - what the Conservatives are suggesting is effectively a form of nationalized outsourcing. Employers would be handing over responsibility for payroll processing to a third party, which just happens to be the government rather than a specialist service provider (or perhaps a service provider working for the government.) Organizations would still need to calculate gross pay, make electronic payments to employees and report internally - but processing would be outsourced, payroll disbursements would be automated and the burden of government reporting cut.

Better still, this isn't just outsourcing - it's free outsourcing. Suddenly, employers would be rid of a whole chunk of cost in their payroll function. From that perspective, what isn't there to like?

Well the answer is, quite a lot:

1. The UK government has a long and inglorious record of screw-ups when it comes to large-scale IT-based projects. Last year, for example, the Department for Transport was accused by a government audit committee of "stupendous incompetence" in an HR, payroll and finance shared services project where it managed to convert £57m (US$87m) worth of anticipated benefits into an £81m net cost to the taxpayer. Putting your trust in an IT system of this scale would be an unparalleled exercise in optimism - not so much 'glass half-full' as 'liquor bottle completely empty and can I have another one please, barman?'.

2. Nothing in life is free. What's really happening here is that costs that are currently borne by employers are instead being spread among taxpayers. In a business, shareholders get a say on how high they're prepared to let these costs climb (by employing more or fewer people). In a nationalized set-up, taxpayers have no say. This system is only fair if you're completely confident that the increased tax revenue would more than compensate for the costs of building, maintaining and managing the system (see Point 1 about IT screw-ups).

3. The set-up would need to be sophisticated, coping with retro calculations, grossing up salaries, the variables of salary sacrifice, complex share option/bonus schemes and the like. It's theoretically possible to build an automated system to cater for every possible variable since this is predominantly a rules-based business - especially if you simplify the tax code at the same time. But it would require a pretty impressive infrastructure and a very smart web-based front-end. Is UK government capable of delivering that? (see Point 1 about IT screw-ups).

4. The scheme only tackles part of the payroll cycle. Employers would still need some form of payroll department or outsourced provider to collect and calculate gross data, manage internal data transfer and reporting, handle gross-pay-related employee queries and so on. All of which puts a bit of a dent in the cost-saving argument. In addition, the government would still need to randomly audit this aspect of the employer's work, which adds a second dent.

5. Customer service (for employees and employers) would be another accident waiting to happen. To reduce the taxpayer burden, the government would need to rely heavily on payroll self-service, supported by low-cost offshore call centers. The first requires adept, user-friendly technology (see Point 1 about IT screw-ups) while the second is prone to service quality issues without strong management. In addition, one of the biggest issues in handling complex queries in a service center is managing handovers (from one subject matter expert to another) and escalations. Trying to do so on this scale is, let's say, a challenge.

6. And finally, there's the big elephant in the room. Where's the government going to find all the payroll subject matter experts?

You do have to praise the Conservatives for investigating ways to reduce the burden on business, increase tax revenues and improve payroll efficiency. This one, though, is going to struggle to get past the pilot stage.

Nothing's certain in the world of international payroll, but it's that time of year when we stick our necks out at Webster Buchanan Research and predict what the coming twelve months might bring. And for the vendor community, 2010 looks pretty interesting...

Firstly, we reckon this will be the year when at least one multi-country payroll vendor will finally be able to claim they cover the entire globe - or at least all the parts you can reasonably expect to cover when you leave aside failed states and impenetrable dictatorships on the Korean peninsula. With one vendor now claiming to cover over 160 countries, and several others hovering around the 100 mark, the goal is already in sight: there around 200 states worldwide, consisting of members of the United Nations plus the Vatican, Taiwan and several states that aren't universally recognized across the global community.

The first vendor past the post will be a multi-country payroll broker/aggregator - the guys who build a network of in-country processing specialists, link them together and provide a single interface to the customer, sometimes doing some of their own in-house processing at the same time. While one or two leading software providers have - surprisingly - made only marginal increases in their country coverage over the last year or so, some of the vendors that use the broker model have been in overdrive. Whether one vendor does it alone or two or three vendors join forces remains to be seen.

At the same time, we expect that even as claims of near-global coverage are made, no vendor will actually be processing for live customers in every state around the world by the end of 2010. As we pointed out in Webster Buchanan's Second Annual Multi-country Payroll Review, we differentiate between an aggregator's country capability - the countries it can theoretically cover - and the countries where it's proven to be processing with real customers today. There's usually a gap between the two, and while it may narrow in 2010, it's unlikely to completely close.

Secondly, this will be another year of partnerships and acquisitions, as more suppliers realize that there's a limit to how many times you can reinvent the wheel when it comes to dealing with country-specific legislation. While the purists who favor one single delivery model for multi-country payroll still have a case - sometimes a compelling case, in fact - for many it's about mixing models to get results.

Thirdly, country coverage isn't the most important point in multi-country payroll - quality comes before quantity. So even as the industry marches towards something approaching true global delivery, we expect to see continuing glitches in service delivery. It's not that we're pessimists - it's just that we've been around a long time and these things really aren't easy to get right.

Finally, we expect this to be a year where skills shortages really start to bite. We've long warned at Webster Buchanan that there simply aren't enough people with enough international payroll experience to go round, and the problem will grow as more organizations start to roll out projects. Closely connected to this, there'll be continuing demand for practitioners to share experiences and learn from each others' successes and mistakes. As always, Webster Buchanan plans to make its own modest contribution to helping here, through our research, courses, events in Europe, Asia and North America - and a big initiative we plan to unveil in the coming months. Watch this space - and Happy New Year!